It is no secret that Canadian business-owners are facing a succession crisis. The Canadian Federation of Independent Business recently released a report, titled “Succession Tsunami: Preparing for a decade of small business transitions in Canada”, which indicates that 76% of small business owners are planning to exit their businesses in the next ten years.

These businesses represent approximately $2 trillion of business assets. According to this survey of 2,479 small business owners, only 9% of business owners have a formal succession plan in place. Even among owners intending to exit within 12 months, only 16% have a formal plan. Approximately one-quarter of departing business owners will sell or transfer to a family member, another quarter will sell to the employees of the business and half of owners intend to exit their business by selling to an unrelated owner. 

However, more than half of business owners reported that finding a suitable buyer is an obstacle to succession planning. Protecting employees was the top priority of exiting business owners, and more than half reported that they would be more likely to sell the business to their employees if the option was available.

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